GlobalFoundries Confirms CHIPS Act Funding Comes Without US Equity Stake

TLDRs:

• GlobalFoundries receives CHIPS Act funding tied to milestones, no US equity stake involved.
• Intel’s CHIPS Act grants converted to equity; GlobalFoundries retains independence.
• GlobalFoundries’ $16B investment spans ten years, including $3B for research.
• CHIPS Act targets U.S. semiconductor capacity growth amid geopolitical concerns.

GlobalFoundries, the US-based semiconductor manufacturer, has clarified that its CHIPS Act funding does not involve an equity stake for the U.S. government.

The announcement was made at the Deutsche Bank Technology Conference, where CFO John Hollister emphasized that the funding is strictly linked to achieving specific project milestones.

This distinction comes in the wake of recent U.S. government moves to take a 10% stake in Intel through CHIPS Act grants, as well as agreements with Nvidia and AMD that involve revenue sharing from their China operations. Unlike Intel, which faced financial pressures prompting equity conversion, GlobalFoundries’ funding structure signals a stronger financial position and negotiating leverage.

$16 Billion Investment in U.S. Chip Manufacturing

Earlier this year, GlobalFoundries raised its planned investment to $16 billion, earmarking $1 billion for capital spending and $3 billion for advanced chip research.

These funds are intended to support expansions at its fabrication plants in New York and Vermont, including the conversion of the Vermont facility to produce gallium nitride (GaN) chips, known for their energy efficiency compared to traditional silicon.

The research portion will focus on specialized technologies such as chip packaging, silicon photonics for quantum computing, and GaN applications for electric vehicles and AI servers. This decade-long investment demonstrates GlobalFoundries’ commitment to strengthening its multi-client, multi-technology strategy.

Milestone-Based Funding Reflects Financial Health

Analysts highlight the contrast between Intel and GlobalFoundries’ CHIPS Act arrangements. Intel’s grants-to-equity conversion points to its weakened financial position, offering temporary relief but not resolving competitive challenges against Nvidia and AMD.

By contrast, GlobalFoundries’ milestone-based approach allows the company to maintain operational independence while securing government support.

This flexible strategy allows the U.S. government to mitigate risk, taking stakes in companies that need financial support while supporting healthier firms through performance-based grants. It also underscores the tailored nature of CHIPS Act funding, which adjusts to each company’s strategic needs and financial stability.

CHIPS Act Supports U.S. Competitiveness

The CHIPS Act aims to address critical vulnerabilities in global semiconductor supply, where over 70% of production occurs in Taiwan, South Korea, Japan, and China. By 2032, U.S. advanced logic manufacturing capacity is projected to grow from 0% in 2022 to 28% of global capacity, marking the largest planned expansion worldwide.

The legislation is also driven by market forecasts showing that data centers will account for over half of semiconductor spending by 2030. Domestic manufacturing capacity is increasingly critical for economic security and technological sovereignty. GlobalFoundries’ milestone-based investment contributes to this national effort while allowing the company to pursue specialized, differentiated technologies rather than competing directly with leading-edge players like TSMC and Samsung.

That said, GlobalFoundries’ CHIPS Act funding approach illustrates a strategic evolution for both the company and the U.S. semiconductor industry. By linking government support to measurable milestones rather than equity, the company maintains independence, strengthens U.S. production capacity, and positions itself for sustainable growth over the next decade.

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